Can the Baya Bar franchisor specify additional coverage requirements in writing?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
Within thirty (30) days of any such required new limits or types of coverage, Franchisee must submit proof to Franchisor of Franchisee's coverage pursuant to Franchisor's requirements.
- 15.5 Additional Insured. All required insurance policies shall name Franchisor and their affiliates and their members, officers, agents and employees as additional insureds as their interests may appear. All public liability policies shall contain a provision that the additional insureds, although named as insureds, shall nevertheless be entitled to recover under such policies on any loss caused by Franchisee or Franchisee's servants, agents or employees.
Source: Item 22 — CONTRACTS (FDD page 56)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, the franchisee is required to maintain insurance coverage that meets the franchisor's requirements. Within 30 days of any new required limits or types of coverage, the franchisee must provide proof of coverage to Baya Bar. This indicates that Baya Bar can indeed specify additional coverage requirements.
Furthermore, all required insurance policies must name Baya Bar and its affiliates, members, officers, agents, and employees as additional insureds. The public liability policies must include a provision that allows the additional insureds to recover under the policies for any loss caused by the franchisee or their staff, even though they are named as insureds.
This requirement ensures that Baya Bar is protected from potential liabilities arising from the franchisee's operations. It is a common practice in franchising to have such stipulations to safeguard the franchisor's brand and reputation. Franchisees should ensure they understand and can meet these insurance obligations to avoid being in breach of their franchise agreement.